The Future of Hydropower in Latin America

Introduction

Latin America's geography has bestowed the region, and in particular South America, with some of the best hydropower resources in the world. Mountain glaciers, steep alpine valleys and river networks running for thousands of kilometers offer ideal conditions for developing hydroelectricity.

The region has a long history of exploiting its hydropower potential. The technology played a role in national electrification programs carried out during the early 20th century. In the 80s and 90s, state-run power utilities undertook large-scale dam projects to meet growing electricity demand. Most of these so-called "mega dams" are located in Brazil, including the second largest hydroelectric station in the world, the 14GW Itaipu dam on the Paraná River, jointly operated with Paraguay. Nevertheless, large and medium-size dams are connected to nearly every power grid in Latin America.

Hydropower has thus been the principal supply source for Latin American electricity consumers over many decades. Moreover, there remains much untapped potential in the region, particularly in South America.

"Estimates on the utilization rate of the total hydropower potential in South America range between 25% and 50%, depending on the methodology used," says Arturo Alarcón, an energy specialist at the Inter-American Development Bank (IDB). "Hence, there's still a lot of potential to be developed - between 200GW and 500GW, again depending on the methodology."

In many parts of Latin America, however, the heyday of hydropower development has come to pass. Environmental and social opposition, beginning in the 1990s, has gained traction in recent years, stalling the development of new plants. Meanwhile, intensifying droughts and climate change are curtailing production at existing hydroelectric stations.

New energy sources also are capturing a growing share of the regional electricity matrix. Natural gas is now the second largest source of electricity in Latin America, as gas-fired thermoelectric capacity is brought online to provide backup generation for hydro plants or to replace other fossil fuels that are dirtier or less efficient. More recently, non-hydro renewable energies have started to make inroads into the region's power markets.

"This picture of course varies from country to country, but, as a general outlook, in the last 15 years the increasing competitiveness of other renewables - such as wind, solar and biomass - has brought about more choices for supplying the region's growing energy needs," says Luiz Augusto Barroso, head of Empresa de Pesquisa Energética (EPE), Brazil's federal energy planning and research agency.

This report will examine these trends and others and attempt to understand the evolving role of hydropower in Latin America.

Figure: Hydro Generation

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